Oracle apparently has no sense of irony when it comes to patents. The day after a judge issued a complete smackdown in Oracle's "big" patent and copyright lawsuit against Google, Oracle has suddenly decided that it doesn't like patent bullies. Well, as long as the bully isn't Oracle. It filed its own case against Lodsys -- the quite infamous patent troll that has been threatening and suing tons of companies for daring to do in-app payments. Apparently, Lodsys has targeted Oracle customers and the company has had enough. It's actually good to see more tech companies fight back against Lodsys, but it does seem a bit odd on the timing for Oracle, given its over-emphasis on the importance of not violating patents in the earlier case.

The story of Lodsys is, by now, quite an infamous one in smartphone app development circles. The "company" (and I use that term loosely) owns a few patents, which it basically claims covers any iPhone app that involves in-app payments:

• 5,999,908: Customer-based product design module
• 7,133,834: Product value information interchange server
• 7,222,078: Methods and systems for gathering information from units of a commodity across a network
• 7,620,565: Customer-based product design module

This is despite the fact that Apple offers in-app payments as a feature of its platform, and Apple, in fact, holds a license to the patent in question. Of course, Lodsys and its supporters argue that Apple's "license" only applies to Apple and that it's proof that the patent is valid. That's not accurate however. The patents Lodsys holds were spun out of Intellectual Ventures, so it's most likely that Apple's "license" to them comes from the fact that it's one of the many large tech companies who have paid off IV to be protected from such patents. Apple has said that it will defend iPhone developers in court if they take on Lodsys, but it's still an expensive proposition, and even some of the most principled app developers are realizing that it's cheaper to settle than to fight.

This is, of course, exactly what Lodsys (and many other patent trolls) rely on. The patent system today is such that if you get sued, you're almost guaranteed to have to spend at least $1 million defending yourself in court. This is not fair. This is not reasonable. But it's a key element in our broken system, and the trolls exploit it as much as they possibly can.

Thankfully, some companies are trying to fight back. Despite Apple's promises to fight on behalf of its developers, Lodsys continues to both threaten and sue, including going after some big companies, like Dell, Rosetta Stone and Overstock. Of course, one reason why Lodsys wants to keep going is that at least one of its patents expires in a few months -- and it probably wants to squeeze as much out of it as possible. As the article linked here by Jeff Roberts highlights, a Seattle app developer, A Thinking Ape, has decided to jump ahead of the line by filing for a declaratory judgment against Lodsys. Lodsys's initial threat letter and A Thinking Ape's filing are embedded below. The filing includes details of many other declaratory judgment filings against Lodsys and argues that the patents are both invalid and that A Thinking Ape doesn't infringe them anyway. It certainly would be nice to see Lodsys smacked around in court a bit, but Lodsys and its secretive "owners" are still likely making out like bandits by effectively taxing tons of app makers.

Lodsys, the Texas-based shell company (with some connection to Intellectual Ventures) that has threatened tons of developers for daring to offer in-app payments for mobile apps using either Apple's or Google's app store payment system, is apparently getting some developers to pay up. Paid Content has the unfortunate story of Michael Karr, a college sophomore and app developer, who says he simply can't afford to move forward and can't wait to see if Apple steps in and protects developers. So he's agreed to pay up. Of course, because this is the way most patent trolls work, he can't say what kind of agreement he came to with the company. This is pretty ridiculous, and if the situation doesn't make you angry, you're not paying enough attention to what's going on here. Basically a company that does absolutely nothing is shaking down tons of companies and individuals for using Apple's and Google's own payment mechanisms. First, there shouldn't be anything patentable here. Second, through deals with IV, both Apple and Google have technically "licensed" the tech already, so under basic patent exhaustion concepts, the developers should be immune from such suits. But Lodsys and the trolls like it abuse the system, knowing that the cost of fighting them greatly exceeds how much they'll settle for. It's a pure loss. Money that was going to innovation now goes into the dirty pockets of some innovation-killing patent lawyers. Sickening.

You almost have to wonder if Lodsys is filing its patent infringement lawsuits solely to demonstrate how ridiculous the system is. Its latest lawsuit is against Rovio, the makers of the nearly ubiquitous destroyer-of-productivity game Angry Birds. One hopes that Rovio, with the many millions of dollars its raised recently, can afford one mighty eagle of a lawyer, and perhaps it can show Lodsys what happens to pigs with bogus patents.

This really isn't much of a surprise, but the new posterboy for the problems of a patent system gone mad, Lodsys, apparently isn't taking its recent tongue-lashing from Apple all that seriously. Instead, it's just ramped up its campaign to sue software publishers -- even though it filed these lawsuits before the time on its demand letter had ticked off the clock. The reason, of course, was so Lodsys could get the lawsuits going in East Texas and its notoriously patent-holder friendly court system. Of course, this is also pretty obnoxious. Why give someone a deadline at all if you're going to sue them before the deadline?

With Lodsys providing an excellent case study in the patent system run amuck with its plan to sue a bunch of independent iOS developers for offering Apple's official in-app payment offering, one of the big questions was how Apple would respond. Lodsys insisted that Apple had a license, but that it only applied to Apple, not to any Apple developers. Apple has now publicly disagreed and claimed that it would defend developers against any such claims.

I was wondering if Apple would even contest the validity of the Lodsys patent or whether the in-app payment offerings were infringing, but the company didn't even bother. Instead, it notes that Apple has indeed licensed the patent, and any of the developers using the in-app payment solutions aren't doing their own thing, but are using the already licensed Apple technology, and under the famous Supreme Court ruling in the Quanta case, if a patent holder licenses a product to one player in the supply chain, it can't then go after others down the stream. While some are claiming that this will still involve a fight between Apple and Lodsys over the exact terms of Apple's license, I don't actually think that's the case. Apple's not arguing the nature of the license, but is claiming that since these developers are using Apple technology, the patent has been exhausted in this case. In fact, it seems like a pretty direct parallel to the Quanta case, which is going to make it difficult for Lodsys to get very far.

Following last week's news of patent troll Lodsys going after a bunch of independent or individual iOS (iPhone/iPad) developers who were making use of Apple's in-app payment offerings (as required by Apple if you want to sell within an app), the company has put up a blog FAQ where it seeks to answer a bunch of questions that people have been asking.

It's basically a compendium of ridiculous, silly and debunked arguments for why patent trolling is awesome (while also denying that Lodsys is a patent troll). There were some weakly-sourced rumors over the weekend that Lodsys was a front company for Intellectual Ventures, but there wasn't much significant evidence to support that, and Lodsys denies it. It is true that the patents in question were once owned by IV, who sold them (and it's not clear if IV still has an economic interest in the patents -- something it allegedly keeps with some of its patent sales, though it's notoriously secretive in such deals). However, Lodsys insists that IV sold all of its rights to Lodsys.

Of course, the key question is what does Lodsys want. There was some speculation that it was pushing for a license from Apple, but it notes that Apple already has a license (though, it's almost certainly from when the patents were held by IV). It also notes that Microsoft and Google hold licenses (again, potentially via IV), so it may be going after developers on other devices soon too. Of course, Lodsys pretends that the licenses from Apple, Google and Microsoft show that the patents are legit, but that's being deceptive yet again. From the details, it's almost entirely certain that all three companies got the license as a part of a blanket license from IV, and had no idea about this specific patent, nor took any interest in the details of this particular patent. For Lodsys to pretend this legitimizes their patent is yet another example of patent trolls being misleading. This patent was not considered important by Apple, Google or Microsoft. It was almost certainly included in a bulk licensing deal.

Finally, Lodsys points out that it has no interest in receiving a single lump sum from big companies, claiming that it's likely to get "the best return" by shaking down developers one-by-one-by-one. So, what does Lodsys want? Well, it appears to want at least 0.575% of the entire in-app payment market:

In the case of an Application doing an in-application upgrade (and only this scenario), Lodsys is seeking 0.575% of US revenue over for the period of the notice letter to the expiration of the patent, plus applicable past usage.

Of course, since the power of in-app payments is that it lets you do a lot more than just app upgrades, you have to imagine Lodsys is asking for a lot more in those other cases.

And for what? For coming up with an insanely abstract idea that was a natural and obvious evolution of such apps. No one -- no one -- came up with the concept or implementation of in-app payments for mobile device apps because of this patent. And, of course, this assumes (incorrectly, of course) that this will be the only patent that someone digs up that appears to (broadly defined) cover things like in-app payments. If all such patent holders start demanding 0.575% (or more) this will put a huge burden on developers.

Lodsys talks high and mighty about "property rights" and paying those who are owed money in its blog, but those claims are laughable. First, it claims that it's Lodsys patents that are responsible for in-app payments:

The economic gains provided by the Lodsys inventions (increase in revenue through additional sales, or decrease in costs to service the customer) are being enjoyed by the business that provides the product or service that interacts with the user. Since Lodsys patent rights are of value to that overall solution, it is only fair to get paid by the party that is accountable for the entire solution and which captures the value (rather than a technology supplier or a retailer).

But that assumes, totally incorrectly, that Lodsys or even the original patent was instrumental in making this happen. It was not. This is the natural evolution of app development. But Lodsys can't let up and gets ridiculous:

As a comparative example, it is the owner of the hotel who is responsible for the overall service (value proposition) that guests pay for, not the owner of the land that the hotel may be leasing, not the travel agent that sold the reservation, not the manufacturer of tools such as hammers, nor the provider of materials such as nails or steel beams, which may be used in building the hotel; nor is it the outsourced linen washing service or the architect of the building who is responsible. Lodsys’ patent portfolio is being used as a part of an overall solution and we are seeking to be paid for the use of patent rights by the accountable party.

Except that whole first part disagrees with the conclusion Lodsys is shooting for. Yes, the owner of a hotel is responsible for its overall service, but if you went to the owner of a hotel and said "hey, I came up with the idea of putting bathrooms in hotel rooms, pay me," the owner of the hotel would laugh at you. Because that's just a basic implementation that's an obvious advance as a result of indoor plumbing. Ditto for in-app payments. That's an obvious advance in the evolution of mobile apps. Again, no one is doing in-app payments because they suddenly discovered this Lodsys patent and its vague and useless descriptions.

There's also the myth of the brilliant inventor shining the light on this concept via this patent for the rest of the world to learn from:

Dan Abelow is an independent inventor who visualized/created metaphors, documented for the world to see (in exchange for exclusivity) and created value for doing so. This ideation, as expressed in the patent, enabled a building block for others to build on and create more value.

That assumes that the people being sued actually built off of this patent. Lodsys presents absolutely no evidence to support such claims, because it almost certainly has none. Of course, Lodsys defends patent trolling and insists that people who don't like this are just freeloaders:

In aggregate, this cycle of patent licensing means that more invention can happen and it means that the economic profit pie is distributed more efficiently to suppliers of building blocks that are incorporated in the products or services.

This is false. And it's been shown false over and over and over again by various economic studies. It's based on the very false assumption that any economic activity is good economic efficiency. When the economic activity involves artificial protectionist barriers to innovation (which is what's happening here), then nearly every serious economist will point out the serious costs involved in hindering economics. To claim that this means more invention can happen is simply not supported by the evidence at all, which suggests more optimal results are found without patents getting in the way.

There are lots of bills in life that it would be preferable to not pay if one didn’t have to. Lodsys is just trying to get value for assets that it owns, just like each and every company selling products or services is, trying to do business and make a profit. Its odd that some of the companies that received notices had such a visceral reaction. Some of these companies have our favorite apps, for which we paid the asking price. We realize you have to get paid for your work and so do we.

It's not that people don't want to pay these bills. It's that they think it's ridiculous that some company that no one's ever heard of, holding some piece of paper that includes nothing of value or relevant to these developers, is suddenly demanding a cut for doing absolutely nothing. That's incredibly different than someone paying for an app that they liked.

Another day, another example of a patent system holding back innovation. The latest is that a typical patent troll operation, named Lodsys, is threatening and/or suing a bunch of iOS mobile app developers for daring to make use of Apple's own in-app payment API to offer the ability to make purchases from within their apps. Lodsys lists out four patents that "are available for licensing."

• 5,999,908: Customer-based product design module
• 7,133,834: Product value information interchange server
• 7,222,078: Methods and systems for gathering information from units of a commodity across a network
• 7,620,565: Customer-based product design module

It appears that whichever patents Lodsys is using in bringing this claim, it's applying them extremely broadly. Meanwhile, the various developers who have now been sued are pretty freaked out. Most of them appear to be small shops -- perhaps just an individual developer -- whose big "mistake" was to actually use the tools Apple provided to make their software better. I can't see how anyone can defend a lawsuit like this as promoting the progress. The idea that in-app payments wouldn't have come along without these patents is -- on its face, preposterous in the extreme. Putting in-app payments into products is a natural evolution, and any programmer with a modicum of skills could have figured out ways to implement it. To claim that a patent was needed in this arena is simply ridiculous.